Main Menu

Share

Small Brewer Duty Reform Coalition formed

Share this:

Posted by Cask Matters on Thursday, 19 January 2017

Over forty small and medium-sized breweries have today launched a coalition with the aim of persuading Government to review and improve Small Brewers Relief (SBR), the system that provides a discount on beer duty to small brewers. The scheme was introduced back in 2002 and then extended in 2004 but has not been reviewed since, despite the considerable changes that have taken place in the beer and pub industry, including the impact of the hated beer duty escalator.

The Small Brewer Duty Reform Coalition (SBDRC) is supportive of the SBR scheme, which has stimulated new entrants to the brewing industry and promoted even greater consumer choice, and firmly believes that it is essential to the future of the sector. However, it has had a number of unintended consequences and the current structure is a significant barrier to growth.

As an immediate step, the coalition is proposing a review by independent consultants which engages all key stakeholders, with the conclusions presented to the Treasury for their consideration. This review should have the following objectives:

Ensure the sector is economically sustainable for the long term

Unlock future growth potential of emerging brewers

Deliver fairer competition for all brewers

Stimulate exports of British beer

Continue to promote diversity and recognise diseconomies of scale for small brewers.

The coalition strongly believes that a review can deliver these objectives and an enhanced SBR system that ensures a vibrant and sustainable brewing industry. This will produce a boost to British beer exports and deliver further growth by removing existing barriers.

Members of the coalition employ around 2,500 staff between them in breweries across the country, and annually produce over 700 million pints. The coalition is aware of many other brewers in the industry that are also concerned about the current structure of SBR. It is inviting any other brewer that wants to see the system improved to join the coalition and to make submissions when the review begins.

A number of bodies in the industry have previously proposed reform of the system, including the BBPA, CAMRA and SIBA. The coalition is keen to engage with all stakeholders in the industry and will be proposing meetings in the coming weeks.

Coalition co-chair Rupert Thompson of Hogs Back Brewery, said:

“The introduction of Small Brewers Relief in 2002, combined with a revival of consumer interest in craft brewed beers, has given the sector a huge boost. However, in recent years we have been seeing on average three to four new breweries opening every week whilst over 20 pubs close. Now there is an issue of economic sustainability.”

Coalition Co-chair Collin Wood of Theakston’s said:

“We continue to applaud and support the objectives of the original Small Brewers Relief scheme, but we passionately believe that a number of its unintended consequences need to be corrected, in order to allow UK breweries of all sizes the opportunity to flourish in the future.”

James Morgan, Truman’s Beer

“Small Brewers Relief was intended to encourage brewers to grow and invest in long term sustainable businesses (and has played an important part in the growth many have enjoyed including Truman’s), however, as with all tax reliefs there have been unintended consequences. Our industry will only thrive and be truly sustainable if any government support encourages long term investment in growth by brewers of all sizes in a more equitable fashion.”

James Cuthbertson, Dark Star

“We welcome and support the Small Brewer Duty Reform Coalition on the basis that the world has changed since the introduction of SBR and we must look at ensuring our sector remains one in which brewing talent can flourish, but one that is also sustainable.”

Jonathan Price, Exmoor Ales

“Reduced levels of duty for small brewers serves a worthy purpose of reducing the barriers to entry, and has led to a vast increase in number of breweries. An unintended consequence of the structure of this scheme has been through the effective prohibition of mergers and acquisitions, undermining the value of brewery businesses, and inhibiting the natural development of breweries from small, to medium and larger scale producers to challenge the establishment. A revision to the structure of the scheme would improve the sustainability of the industry.”

Miles Jenner, Harvey’s

“Britain’s brewers comprise many different styles of operation, reflecting both heritage and innovation. For this to be sustainable it is essential that beer duty neither advantages nor disadvantages any one element but, rather, is seen to be fair for all.”

Matt Jackson, Lancaster Brewery

“Small Brewer Relief, in its current form acts as a major barrier to growth. At Lancaster, we made a significant investment in expansion but found that the increased duty rate meant that we were unable to compete with those brewers receiving the full discount. As a result, we decided to scale back production to lower levels. There must be a solution that allows brewers to grow gradually beyond the current 5,000 hectolitre cliff edge.”